CVA advice on an online chat

20 September 2017

It can sometimes be tricky to know who to turn to, so many of our clients seek CVA advice through our online chat service. With this service, an expert is only a few clicks away and is always ready to help you figure out your next steps.

We’ll start off with a quick recap on what a CVA is. Then, we’ll show you how our advisor, Keith, recently helped a client by giving expert CVA advice through our online chat service.

What is a CVA?

A CVA or Company Voluntary Arrangement is a contract between an insolvent company and its creditors. However, it is only available to companies that are viable.

It allows the insolvent company to pay back debts, or at least a proportion of them, over an agreed period. It also prevents costly or more serious legal proceedings, such as winding up petitions and compulsory liquidation, from taking place.

The terms are proposed by the company with support and advice from a licensed insolvency practitioner (IP). This proposal must then be approved by the creditors at their meeting.

More than 75% of creditors must vote in favour of the proposal to get a CVA passed. Usually an agreement like this arranges repayment of between 30% and 100% of the company’s debts over a period of 3-5 years.

A CVA is always worth considering, as it offers several benefits:

  • Directors keep control of the company
  • It encourages the recovery of the business
  • There is no statutory investigation of the directors
  • The return for creditors is usually much better than it is through administration or liquidation
  • It protects the company from further legal action on debts bound up in the arrangement.
  • All creditors are bound by the arrangement, even if they voted against it
  • Often, more employee jobs are saved

So, that covers the basics, but it’s always best to seek individually-tailored advice as financial situations differ from company to company.

CVA advice through our online chat service

Our experts are available to give excellent CVA advice through our online chat service, available Monday to Friday, 9am to 8pm.

This means that we’re always here to help and support worried directors who are considering CVA. We offer unique advice tailored to your situation, so you can be sure that we’re offering the most appropriate solution for your business.

Here’s a transcript from someone who recently got in touch:

Keith F Steven
Hello. How may I help you?
good morning


Client
in a CVA what happens if a creditor has a personal guarantee from a director and insists that this is honored even if the CVA is agreed by the other creditors


Keith F Steven
a guarantee is just that a guarantee and the guarntor needs to pay or do a deal. This is quite common especially with new forms of lending such as Funding Cicrcle
what we do is discuss this with directors and creditors. Sometimes for example 50p in £1 is paid by company and 50p in £1 by directors
sorry about typing
who is the PG provided to?


Client
TRavis Perkins when opening up credit terms. Not sure it it was made clear that PG was being made


Keith F Steven
well we have tried to defeat TP directors guarantees without success . TP always force a deal or full payment. How much is owed to TP


Client
£10,000


Keith F Steven
ok how much does the company owe to HMRC and trade creditors


Client
£1.3 m


Keith F Steven
ok the way to fix this is to look at CVA, for the business, then look at your personal situation as a consequence of any future CVA. Do you pay yourself through PAYE or drawings or dividends?


Client
PAYE


Keith F Steven
OK good. By modifying your salary by say £15k a year then proposing a 12 month repayment to TP you would pay it back from salary. this woudl satisfy TP and help avoid any personal insolvency risk
Woudl you like to discuss this with oru Scotland regional manager. We can arrange that free call today and then a free meeting.
at that meeting we go thorugh all options and problems. then we make a written report back to the board including what our costs would be for the CVA an other options.


Client
I'm not looking into for myself but for one of the directors. If he paid it back through his salary can he reclaim this as a CVA creditor himself or does he 'lose' this money


Keith F Steven
he would be a (subrogated) creditor yes, but standard HMRC modifications to every CVA require "connected creditors claims to not survive the CVA"
thus no he wouldn't get it back IF the HMRC vote was more than say 25% of the overall VOTES cast
https://www.companyrescue.co.uk/cva-company-voluntary-arrangement this page gives you a link to the 120 page CVA guide that covers this and all other questions your director may have.
I will give you my personal mobile, I can be reacheed over the weekend on 07974 086779


Client
thanks - I'll give him a transcript of this and suggest he contacts you if he wants to discuss further unless there is someone else in your company that he should speak to


Keith F Steven
or he can call Derek Robinson 07540 432112

thanks for the chat


11:56 am
Client
No - thank you - you have been very helpful

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